This competitive renewal will: 1) examine the relationships among change in nurse staffing (registered nurse full-time equivalents per 1000 in-patient days), change in hospital financial performance (operating margin, cash flow) and change in quality of care (mortality, length of stay, complications, and failure to rescue); 2) determine whether managed care penetration and hospital ownership moderate these relationships; 3) examine the relationship between nurse staffing and quality of care for children. The sample is a panel of 608 hospitals in New York and California for 1996 - 2001. The research questions are: After controlling for relevant population, market and hospital characteristics: 1) What is the nature of the relationship between change in nurse staffing and change in quality of care? 2) What is the nature of the relationship between change in hospital financial performance and change in quality of care? 3) What is the nature of the relationship between change in hospital financial performance and change in nurse staffing? 4) Are these relationships dependent upon the extent of managed care penetration in the community? 5) Are these relationships dependent upon ownership status of the hospital (i.e., profit vs. not-for-profit)? 6) Is there evidence of a relationship between nurse staffing and quality of care for children? The study is unique in several ways. First, using a panel of hospitals, and examining changes over time contributes to stronger inference and conclusions more pertinent for policy development. Second, data are from states where complications can be distinguished from comorbidities, thus improving measurement of quality. Third, the analytic method selected controls for endogeneity among key relationships and incorporates the idea that contemporaneous circumstances and history may affect current outcomes. Finally, this will be the first study to examine the relationship between nurse staffing and quality of care for children. These advances will permit a finer-grained understanding of the relationships among nurse staffing, financial performance, and quality of care, contributing to informed policy development related to managing cost-quality tradeoffs in the high-intensity, high-cost acute care hospital.